Compendium of Antidumping and Countervailing Duty Laws in the Western Hemisphere

Methodologies/Definitions

Threat of Injury

WTO Standard: A determination of threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a situation in which the dumping or subsidies would cause injury must be clearly foreseen and imminent. (footnote omitted). In making a determination regarding the existence of threat of material injury, the authorities should consider, inter alia, such factors as:

(i) a significant rate of increase of dumped or subsidized imports into the domestic market indicating the likelihood of substantially increased importation;

(ii) sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped or subsidized exports to the importing country's market, taking into account the availability of other export markets to absorb any additional exports;

(iii) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and

(iv) inventories of the product being investigated.

No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped exports are imminent and that, unless protective action is taken, material injury would occur. (AD Agreement, Art. 3.4; SCM Agreement, Art. 15.4)

With respect to cases where injury is threatened by dumped or subsidized imports, the application of anti-dumping or countervailing measures shall be considered and decided with special care. (AD Agreement, Art. 3.5; SCM Agreement, Art. 15.8)

The cited WTO standards are applied. Article 9 of Decree 2121/94 is of supplementary application in this subject, as long as it does not contradict with the Agreement provisions. The competent implementing authority shall consider that there is a threat of material injury to a domestic industry when such threat is real and certain and when the injury is imminent.

The implementing authority should take into account the following circumstances, while not excluding other possibilities:

(1) an increase in the share of the imports under investigation in the domestic market even if there is not yet any material injury to the domestic industry;

(2) overproduction, excess capacity or accumulation of inventories of the product under investigation in the country of origin or export, which may possibly be exported to the Argentine Republic; and

(3) accumulation in the Argentine Republic of the product under investigation, even if they have not been sold in the country. (Decree No. 2121/94, Art. 9).

It must be shown to the satisfaction of the competent implementing authority that there is a causal link between the import of the product under investigation and the existence of threat of material injury to the domestic industry of the like product.

The competent implementing authority shall ensure that injury caused by factors other than dumping and subsidization of the product under investigation are not attributed to imports of that product. (Id., Art. 11).

The existence of injury caused by unfair trade practices will be determined based on proof positive and will include an objective examination of:

1. Information on the entire industry of the product in question;

1.1 The volume of imported products subject to unfair international trade practices, to determine whether there has been a considerable increase in that volume, in absolute terms or in relation to the country's domestic production and consumption;

1.2 The prices of imports subject to unfair practices, to determine whether they are considerably lower than those of like products. Similarly, in order to determine whether the effect of such imports is to considerably lower prices or prevent the increase that would otherwise have occurred;

1.3 The impact or potential impact on national producers of products similar to the imported ones, considering all the relevant factors and economic indexes that affect production and sales, such as marked and potential decreases, market share, return on investment, use of installed capacity; factors that impact on domestic prices, the actual and potential negative effects on employment, wages, growth, raising capital, profits, and other elements considered relevant.

2. Information for determining the causal relationship between the imports and the alleged injury.

None of the factors discussed above will alone give rise to a final directive on injury to national production.

Determination of the existence of the threat of injury will be based on facts and not on mere allegations, conjecture, or remote possibilities. The threat of injury will be determined when such injury is imminent. For this purpose, the Technical Secretariat, in addition to evaluating the factors referred to in the preceding item, will consider, inter alia:

2.1 The possibility of a substantial increase in imports while the product in question is being imported at dumping prices or subsidized under such conditions as a supplier's contract or winning a bid.

2.2 An increase in the installed or used capacity in the exporting country.

2) sufficiently freely disposable, or an imminent, substantial increase in, the capacity of the exporter indicating the likelihood of a significant increase in the export of the dumped (subsidized) product to Brazil, taking into account the availability of third-country markets to absorb any additional exports;

3) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase the demand for further imports;

4) inventories of the product being investigated;

5) in the case of countervailing duty investigation, nature of the subsidy or subsidies in question and the trade effects likely to arise there from. Art. 16-1; Art. 23-1.

No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped (subsidized) exports are imminent and that, unless protective action is taken, material injury may occur. (Dec. 1602/95 - Art. 16.2; Dec. 1751/95 - Art. 23.2).

According to Section 2 of the SIMA, the dumping or subsidizing of goods shall not be found to be threatening to cause injury or to cause a threat of injury unless the circumstances in which the dumping or subsidizing of goods would cause injury are clearly foreseen and imminent.

Section 37.1(2) of the SIMA regulations sets out factors to be considered in a threat of injury determination, including:

(1) the nature of the subsidy in question (if applicable) and its likely effects on trade;

(2) whether there has been a significant increase of dumped or subsidized goods, for which the rate of increase indicates a likelihood of substantially increased imports;

(3) whether there is sufficient freely disposable capacity or an imminent substantial increase in the capacity of an exporter;

(4) the potential for product shifting where production facilities that can be used to produce the goods are currently being used to produce other goods;

(5) whether the goods are entering the domestic market at prices that are likely to have a significant depressing or suppressing effect on the price of like goods and are likely to increase demand for further imports of the goods;

(6) inventories of the goods;

(7) the actual and potential negative effects on existing development and production efforts, including efforts to produce a derivative or more advanced version of like goods; and

(8) any other relevant factors.

Additional factors relevant to the determination of threat of injury are prescribed in subsection 37.1(3) of the SIMA regulations. (See listing of factors under the "Injury" section).

The determination that there exists a threat of material injury must be based on facts, and not simply on allegations, conjecture or remote possibilities. Any change in circumstances whereby dumping or subsidies could be expected to cause injury must be clearly identified and imminent. In arriving at a determination that there exists a threat of material injury, the Commission will take into consideration the following factors, among others:

i) significant rate of increase in the importation of dumped or subsidized goods into the internal market, such as to indicate the probability that imports are growing substantially;

ii) sufficient freely available capacity on the part of the exporter, or an imminent and substantial increase in that capacity, to indicate the probability of a substantial increase in exports of dumped or subsidized goods to the Chilean market, taking into account the existence of other export markets that might absorb such an increase in exports.

iii) the fact that goods are being imported at prices that will have the effect of significantly lowering domestic prices, or restraining their rise, and the likelihood that this will create higher demand for further imports; and

iv) the size of inventories or stocks of the product under investigation.

While no one of these factors may necessarily be enough by itself to establish a definitive trend, they may, when taken together, lead to the conclusion that further exports are imminent, at dumped or subsidized prices, and that, in the absence of protective measures, material injury will result.

In cases where dumped imports are found to threaten injury, the imposition of antidumping measures must be examined and decided with particular care. (Supreme Decree No. 16, Ministry of External Relations, published in the Diario Oficial on May 17, 1995).

To determine the threat of significant injury by the dumped imports, consideration shall be given to the imminent effects on the factors indicated in Article 16 of this decree, including the following, among others:

1. A significant rate of increase of the dumped imports in the domestic market that indicates the likelihood of a substantial increase in imports. The likelihood of a substantial increase in imports may also be determined based, among others, on the following facts:

The existence of a requirements or sales contract, the award of a bidding, a negotiable bid, or other comparable contract, or

The existence of letters of credit for payments abroad for imports of the product under investigation, or

A sufficient freely-available capacity of the exporter or an imminent and substantial increase of the same considering, in addition, the existence of other export markets that can absorb the possible increase in exports.

2. The fact that imports are made at prices that will have the effect of driving down or significantly containing the increase of the domestic prices or sales volumes of the domestic producers, and which will likely make the demand for new imports increase; and,

3. The inventories in the country exporting the product under investigation.

None of these factors alone will necessarily suffice to obtain a decisive orientation, but taken together they should lead to a conclusion as to the imminence of new exports at dumping prices and whether, unless corrective measures are adopted, significant injury will ensue. The causal relationship between dumped imports and the threat of significant injury shall be evaluated mindful of the likely effects on the economic factors and indices and consistent with the provisions of the fourth paragraph of the previous article.

A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility.

The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent (the endnote is omitted).

In making a determination regarding the existence of a threat of material injury, the authorities should consider, inter alia, such factors as:

(i) a significant rate of increase of dumped imports into the domestic market indicating the likelihood of substantially increased importations;

(ii) sufficient freely disposable or an imminent, substantial increase in capacity of the exporter indicating the likelihood of substantially increased dumped exports to the importing country's market, taking into account the availability of other export markets to absorb any additional exports;

(iii) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and

(iv) inventories of the product being investigated.

No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped exports are imminent and that, unless protective action is taken, material injury would occur.

With respect to cases where injury is threatened by dumped imports, the application of anti-dumping measures shall be considered and decided with special care.

Threat of a serious injury shall be understood to mean serious injury to a domestic industry that is clearly imminent, and it shall be based on facts and not merely on allegation, conjecture or remote possibility. Threat of injury is an imminent and clearly foreseen danger of injury to a domestic industry. A determination of a threat of injury to domestic industry shall be based on facts and not merely allegation, conjecture or remote possibility.

The change in circumstances which would create a situation in which the subsidy would cause injury must be clearly foreseen and imminent.

In making a determination regarding the existence of a threat of material injury, the authorities should consider, inter alia, such factors as:

Nature of the practice in question and the trade effects likely to arise from the dumping and the subsidization;

a significant rate of increase of dumped or subsidized imports into the domestic market indicating the likelihood of substantially increased importation

sufficient freely disposable, or an imminent substantial increase in, capacity of the exporter indicating the likelihood of substantially increased subsidized exports to the Ecuadorian market in unfair conditions, taking into account the availability of other export markets to absorb any additional exports;

whether the imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and

inventories of the product being investigated.

No one of these factors by itself can necessarily give decisive guidance, but the totality of the factors considered must lead to the conclusion that further exports at dumped and subsidized prices are imminent and that, unless protective action is taken, material injury would occur.

With respect to cases where injury is threatened by dumped or subsidized imports, the application of anti-dumping or countervailing measures shall be considered and decided with special care. The review of the injury or threat of injury shall comprise a period covering imports of the like product in the last twelve (12) months for which information is available.

The investigating authority may modify such period or extend it to cover imports made before and/or after the initiation of the investigation.

Article 39 of the Law establishes that threat of injury means the imminent and clearly anticipated danger of injury to the domestic industry.

A determination of threat of injury shall be based on facts and not merely on allegation, conjecture or remote possibility.

Moreover, Article 68 indicates the standards the Secretariat must bear in mind in determining the threat of damage.

The standards listed in this article are similar to those established in Article 3.7 of the Antidumping Code and 15.7 of the Code on Subsidies.

In determining threat of injury, the Ministry is to take into account any elements which the Ministry deems appropriate and, in particular, the following factors which make it possible to conclude whether further imports in unfair conditions are imminent and whether, unless duties are applied, injury will occur:

(1) increased imports pointing to a well-founded probability of a significant increase in such imports in the immediate future;

(2) freely disposable capacity or an imminent substantial increase therein, pointing to the well-founded probability of a significant increase in exports to the Mexican market in unfair conditions, with due regard for the availability of other export markets to absorb any additional exports;

(3) whether the imports are entering at prices which will have a significant depressing or suppressing effect on domestic prices, and will likely increase demand for further imports;

The determination of material harm or injury shall be based on definite proof and not mere allegations, conjecture, or remote possibilities, and shall comprise an objective examination of:

1. The volume of imports of unfairly traded goods and their impact on the prices of identical or similar products in the domestic market. An analysis shall be done to determine whether a considerable increase in the imported goods has occurred in absolute terms or with respect to national production or consumption. In determining the impact of such an increase on the prices of identical or similar goods in the domestic market, it will have to be ascertained whether the imports of unfairly traded goods have a selling price that is lower, and whether their effect has been to substantially lower the prices of locally produced goods or to prevent a price increase which might otherwise have occurred.

2. The effects of such imports on the domestic producers of such goods. An evaluation will have to be performed of all of the economic factors and indicators that might have an impact on domestic production such as an actual and potential reduction in sales, market participation, benefits and profits, production volume, productivity, return on investment, or capacity utilization; the factors that may have an effect on domestic prices; the margin of dumping; actual and potentially adverse effects on cash flow, inventory, employment, wages and salaries, growth, borrowing capacity, and investment.

This list is not exhaustive and none of these factors taken individually or in combination would be sufficient to justify a determination of material injury or the threat thereof.

In determining the existence of the threat of material harm or injury the country's or the exporter's export capacity, the likelihood of lower domestic prices as a result of such imports, the existence of underutilized capacity, and the increase in inventories held by national producers shall be taken into consideration.

Nevertheless, the threat of injury will require material evidence based on facts not allegations, conjecture, or remote possibilities, and the injury must be imminent.

Information on the volume and effects of imports of identical or similar goods from at least two countries will be gathered to measure the injury caused or threatened, if such goods are under investigation and are competing against one another and against a domestic product provided that the volume of imports from each country is not insignificant and the margin of dumping or the amount of the subsidy from each country is not de minimis.

A determination of a threat of injury shall be based on facts and not merely on allegation, conjecture or remote possibilities and shall include an examination of the following factors:

(a) a significant rate of increase of dumped or subsidized imports into the Paraguayan market indicating the likelihood of substantially increased importations;

(b) sufficient freely disposable or an imminent, substantial increase in capacity of the exporter indicating the likelihood of substantially increased exports, taking into account the availability of other export markets to absorb any additional exports;

(c) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and

(d) inventories of the product being investigated.

None of these factors by itself can necessarily justify a decision, but the totality of the factors considered must lead to the conclusion that further dumped or subsidized exports are imminent and that, unless protective action is taken, material injury would occur.

A determination of a threat of injury shall be based on facts and not on allegation, conjecture or remote possibility.

In making a determination regarding the existence of a threat of injury the factors mentioned in Articles 3.7 and 15.7 of the Anti-Dumping Agreement and the Subsidies Agreement respectively shall be taken into account inter alia.

In determining whether a U.S. industry is threatened with material injury, the ITC is required to consider all relevant economic factors including:

(1) if a countervailable subsidy is involved, the nature of the subsidy and whether imports are likely to increase;

(2) any existing unused production capacity or imminent, substantial increase in production capacity in the exporting country indicating the likelihood of substantially increased imports into the U.S., taking into account the availability of other export markets to absorb additional exports;

(3) a significant rate of increase of the volume or market penetration of imports indicating the likelihood of substantially increased imports;

(4) whether the imports of the subject merchandise are entering at prices that are likely to have a significant depressing or suppressing effect on domestic prices, and are likely to increase demand for further imports;

(5) inventories of the subject merchandise;

(6) the potential for product shifting if production facilities in the exporting country, which can be used to produce the subject merchandise, are currently being used to produce other products;

(7) in any investigation which involves imports of both a raw agricultural product and any product processed from such raw agricultural product, the likelihood that there will be increased imports by reason of product shifting, if there is an affirmative injury determination by the Commission with respect to either the raw agricultural product or the processed agricultural product (but not both);

(8) the actual and potential negative effects on the existing development and production efforts of the domestic industry, including efforts to develop a derivative or more advanced version of the domestic like product; and

(9) any other demonstrable adverse trend that indicates the probability that there is likely to be material injury by reason of imports of the subject merchandise.

The ITC is required to consider these factors as a whole in making a determination of whether further dumped or subsidized imports are imminent and whether material injury by reason of the dumped/subsidized imports would occur unless an order is issue or an undertaking concluded.

A finding of threat of material injury may not be made on the basis of mere conjecture or supposition.

A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would result in dumping causing injury must be clearly foreseeable and imminent.

A determination of the existence of a threat of injury shall be based, inter alia, on the following factors:

(a) A significant rate of increase of dumped imports indicating the likelihood of substantially increased importation;

(b) sufficiently free disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to the domestic market, taking into account the availability of other export markets to absorb any additional exports;

(c) imports entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and

(d) inventories of the product being investigated.

No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped exports are imminent and that, unless protective action is taken, material injury would occur.

A determination of threat of injury shall be made only when a particular situation may become a situation of actual injury.

Consequently, the determination shall not be based on allegation, conjecture or remote possibility. (1992 Law, Art. 13).

The Commission shall determine threat of material injury "when it considers that the threat is real and certain and that the injury is imminent", taking into account the following factors (1993 Regulations, Art. 51):

The nature of the subsidy (if applicable);

Production capacity increases or idle capacity, provided that there are sufficient indications that such increases may result in an increase of exports to Venezuela);

Accelerated increases in the share of the domestic market;

Inventory build-up in Venezuela, or in the country of origin "with the likelihood that they will be exported to Venezuela";